Working Paper No. 1310

Locational Marginal Network Tariffs for Intermittent Renewable Generation

Published: November 29, 2019Pages: 42Keywords: Ancillary services costs; Efficiency; Locational marginal network tariffs; Renewable electricity generation; System stabilityJEL-codes: L94; Q20; Q42

Locational Marginal Network Tariffs for Intermittent Renewable Generation Thomas Tangerås and Frank A. Wolak


The variability of solar and wind generation increases transmission network operating costs associated with maintaining system stability. These ancillary services costs are likely to increase as a share of total energy costs in regions with ambitious renewable energy targets.

We examine how efficient deployment of intermittent renewable generation capacity across locations depends on the costs of balancing real-time system demand and supply. We then show how locational marginal network tariffs can be designed to implement the efficient outcome for intermittent renewable generation unit location decisions.

We demonstrate the practical applicability of this approach by applying our theory to obtain quantitative results for the California electricity market.​

Thomas Tangerås

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Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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